The essential question is what was the last real innovation since the crisis? In the years since the crisis, not only has the banking industry been occupied with heavy regulations but the industry has acquired a number of powerful competitors from beyond banking market. We think it is important for our industry to move the banking industry back to their best time but it seems that we are not moving in the right direction.
One reason might be that innovation needs confidence and we in the banking industry having a difficult time believing in the positive impact of our work. Another reason for a lack of innovation is our strong internal banking culture, which has become our identity. How can a culture be wrong after it has served us for so many years? Today, we are afraid to lose our clients' respect if we change some part of our culture. For example, we have defined the dress code and call it professional but we see that our competitors outside banking are not dressed professional and are nonetheless building large profitable organizations. We have created a definition of professionalism in all communications to the external world, which is not only outmoded, but also very expensive and time-intensive to run. Another strong part of the banking culture is an old-fashioned way to deal with constructive criticism as we see each critique as destructive. We have completely forgotten the fact that, as humans, we make mistakes and that mistakes are needed to achieve excellence.
Behavioral finance has already proven that we do not make the right decisions when we are scared and our question is how much are we able to innovate when we are scared about losing our reputation? In fact, one reason that we do not really innovate is that we are scared to change the basics of our traditional banking culture; we are scared to make mistakes by trying something new. We are scared to change our appearance on the market and we are scared to lose clients. Moreover, we are scared to collaborate with non-bankers in banking-related services. Can we trust non-bankers as their values are different from our conservative values? How can the entire payment be done by a pure IT company? How can we outsource a part of our marketing as there are other companies who do it much better than us? Would a collaboration make us look less like a bank and more like Jack Ma's Alibaba?
One way to start developing innovative DNA is to include a diversified knowledge in our business-as-usual way of banking. We already know that a person who have always been a banker thinks differently than a person who has been a musician and banker. When we apply for a role in the banking industry, we need to fill in the expected picture. If we write in our resume, for instance, that we worked as a musician or we wrote books about innovation or that we have interests beyond accounting, we jeopardize our potential. The appreciation of diversified experience is simply not a part of today's banking culture.
We think that the best place to make worldwide innovations in the banking industry happen worldwide is in Switzerland. As most of the banks of the country are located in Zurich and the city has already many innovative entrepreneurs, this city is better able to make real innovation happen. Perhaps Basel will provide Basel iV later, which is based on pushing banks to develop their DNA to innovate.